Where is the best area in the UK to invest in property?
August 1, 2018
When it comes to choosing where to invest, most experienced landlords agree that it is best to start out close to home and/or in an area you know or where you have contacts.
Typically, you should look within a 15 mile radius of where you live, so that you can visit the property and keep an eye on it as required. Being able to do this within an hour round trip makes sense, as you should be mindful of your own time, especially if you have a busy career or day job.
However, the “15 mile radius” comes with a caveat as the true answer to the question “where is the best area for me to invest?” is actually this - where there is the tenant demand.
No one should ever start a business not knowing if there is demand for your product or service, and property is no different. Hopefully you will be able to find tenant demand close to where you live - that is the most ideal scenario. However, if there is no tenant demand or over-saturation, as there can be in major city centres, then you may need to consider somewhere further afield. You may also need to look long-distance if your budget is not sufficient for the area you live in. Many landlords in London and the South East cannot afford to buy in the region and therefore have to look further north, very often in areas that they have no local or prior knowledge of. But whether you buy down the road or 200 miles away, the process of finding a suitable property will be the same.
The best way to determine tenant demand is by doing research - otherwise known as due diligence. The first thing you can do is ring round local lettings agents asking for their advice as to the best streets in their area for buy to let and asking them which property type in that area is the easiest to let. Most lettings agents are very happy to give general guidance. You can also use the portals like Rightmove and Zoopla to assess how many properties in the area are for rent.
If you are, for instance, assessing three bed houses, put these criteria into the search box and tick the “let agreed” box and see how many properties come up. We did this for Southsea at the time of writing and found that the search on 3 bed houses produced 132 results. We then repeated the search and un-ticked the “let agreed” box, and it then returned 89 results. This suggests that there is quite a high demand for 3 bed homes, and that there is not a great deal of stock available. You can also look at the highest rental value being asked, down to the lowest rental value and see how much stock is at each price point. This again will give a flavour of the market and how much competition your property might experience if you were to buy one to put into that rental band. (As a general rule, there will be greater demand in the bottom third of rental prices for any given area as there is a greater pool of tenants who can afford lower rents than higher rents).
You can also use social media in your due diligence by using property Facebook groups and forums to ask if any landlords who invest in the area can give you some advice as to the best post-codes to invest in, and levels of tenant demand. It stands to reason that there is likely to be higher demand at lower price points, so, for a low risk approach, you should consider buying a “bread and butter” property that is going to have plenty of tenants beating a path to the door.
Your property will need several key things to make it attractive to tenants:
1. Close to good transport links and/or a major transport route.
2. Good broadband signal.
3. Close to major amenities like supermarkets and leisure facilities.
4. Feels “safe” at different times of the day and night.
If you are thinking of offering a family home, then buying a property in a good school catchment area is an absolute must, as it means you will be able to attract a family who will likely want to put down some roots and continue to rent the property while they put their children through school. The family market also likes a garden and somewhere to park two cars. It is interesting to note that, in recent research undertaken by the National Landlord Association, it was found that properties rented to families take up the least amount of property management time when compared to other types of tenants. This is again something to bear in mind if you have a busy life.
While getting to know an area, part of your research can be to walk the streets and get a feel for the area, speak to local shopkeepers about it, and local residents, and get a feel for what it might be like to live there. Whilst you will never live in your investment property, you should perhaps consider if you would, as, if you wouldn’t, then its likely your tenants won’t like it either.
It also makes financial sense to buy in areas, towns, and cities that are up-and-coming and have investment going into them such as improving transport links, new retail parks, new public amenities, regeneration etc. Such areas give you a greater chance of capital appreciation over time.
It's definitely worth noting that you can shorten your property search, by buying a tenanted property via the Vesta platform. The “tenant demand” box is ticked because there is already a tenant in situ. You can find out how long the tenant has been renting the property, how long they intend to stay, and the actual monthly rent they are paying. You can also check with the current landlord as to if they have always paid their rent on time. Finally, you can ascertain how the tenants are treating the property and if they are looking after it.
The Vesta platform is actually facilitating people buying further afield, and therefore being able to access higher yields because of the lower risk exposure of buying a property that is already tenanted, not to mention that you own income from Day One of ownership!
The vital “snapshot” stats we present on each property will tell you the yield being achieved and you can also access all of the due diligence documents which are prepared by Vesta in order to market the property. A tenanted property may very well come with a managing agent as well, meaning that the agent already has an existing relationship with the tenant, and can continue to fully manage the property for you when you take over the tenancy. This again reduces the risk of buying further afield as you can check with the existing landlord as to how effective and pro-active the agent has been.
Vesta is revolutionising the way landlords buy and sell properties because with us you get an extra level of peace of mind - “tenants included”. Knowing your tenant in advance greatly minimises your risk and enables you to buy properties further afield that may be more suited to your investment strategy and budget and also deliver higher yields.
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